Group 1
Inclusive Business Model in Cambodia: Case
Study on Vegetable
Dr. Oum Sothea, Asia Growth Centre, Ngee Ann-Adelaide Education Centre, Singapore
Neak Samsen and Phok Rathak, Nuppun Institute for Economic Research (Nuppun),
Cambodia
Vegetable is very important for Cambodia and
smallholder farmers
• Vegetable is the third most important diet of Cambodians after rice and
fish.
• Cambodia’s total vegetable consumption is estimated at 1.35 million metric
tons per year and only 31% are domestically supplied. The rest are
imported from neighboring Vietnam and Thailand
• The production of vegetables is dominated by smallholder farmers with
limited resources, low level of education, and poverty prevailance.
• Vegetable producers heavily rely on favourable natural conditions, using
traditional farming techniques.
2
Vegetable Business Model: CEDAC’s Natural AgriProduct Cooperative (NAP Shop)
• Business objective and scope
• Started in 2004, donor’s investment, promoted domestic organic products
• Provide safe and high quality vegetables to market (‘social’ purpose)
• Enable smallholders to increase income through market opportunities
- Provide market access
- Upskill smallholders to improve productivity
- Improve community resource use (farmer networks)
CEDAC NAP Shop – Value Chain and Players
Supply of Rice
CEDAC’s Farm
Budget and Technical
Supports
COFE
(Rice Export Company)
CEDAC
Budget and Technical
Supports
Inter-relationship in Technical Support
Budget and Technical
Supports
Supply of Vegetable (20%)
NAP
(Retail Stores)
Budget and Technical
Supports
Supply of Rice
FNN
(Farmer and Nature Network)
Supply of Vegetable (80%)
4
Drivers in Developing and maintaining the Business
• Chain captain - NAP Shops (retailers) - marketing co-op
- Private and profit orientation
- Distribute profit to smallholders
- Grow market share and make the business a unique retail model and
profitable
- Brand value – ‘Seal of Approval’ on product quality and reputation
- Application of ICT – online e-commerce
• Smallholders
-
More profitable market
Higher household income
Opportunities to get involved in downstream
Upskilling
Success Factor
- Success indicators
-
Smallholder livelihood
Consumer access to ‘safe’ food
Creation of demand for smallholder products
Sustainability
- Competitiveness
- Higher productivity
- Sustainability
- Business expansion potential
- Smallholders inclusiveness
- Ownership – joint-venture, shared resources
- Voice – favorable and fairer price bargaining position
- Risk – shorten the supply chain (reduce dependency on middlemen/price
fluctuations)
- Reward – market access, profit sharing, and higher, stable income
Role and Contribution of Key Players
- Key players
- Smallholder farmers, Farmer networks, CEDAC NGOs (training, technology,
extension services and quality control), and NAP Shops (processing,
marketing, and distribution)
- Limited role of government
- Important role
- NAP Shops and CEDAC NGOs (chain captain) - providing the training modules
and activities (farming techniques, financial support, market information,
market access and networks/linkages)
- Smallholder farmers – adherence to production and quality standards
Challenges in Developing and Maintaining the
Model
• Consistent and reliable supply
- Quality a critical factor (CEDAC staff train and inspect in quality control)
- Quantity – responsive to meet growing demand
• Cost of quality control is an issue
- Once expansion happens can they maintain quality control (CEDAC is subsidizing
quality cost (15% of profit from NAP))
- Possible role of government - No standard for organic – It is defined by CEDAC
•
•
•
•
High cost of production vs conventional and imported products
Access to finance
Improve technology and Innovation capability
Formal Business transformation – improve business management
capability
Final Words
• More proactive role of the government – beyond basic infrastructure
• Extension services
• Technology and finance support
• Affordable standard and certification services
• Scale up of the business
• Roll out to wider parts of the country
• More participation of smallholders
• Explore Innovative Business Model (PPP like the case of Taiwan)